HUD recently issued Mortgagee Letter 2020-13 (ML 20-13), extending the coronavirus-related foreclosure and eviction moratoriums announced in Mortgagee Letter 2020-04 (ML 20-04), which WBK previously covered here. Additionally, ML 20-13 provides new Single Family Default Monitoring System (SFDMS) reporting requirements. Pursuant to ML 20-13, the moratorium announced in ML 20-04 is extended through June 30, 2020, for all FHA-insured mortgages except for FHA-insured mortgages secured by vacant or abandoned properties.
In ML 20-13, HUD clarifies that the foreclosure moratorium applies to the initiation of foreclosures and to foreclosures in process. Additionally, deadlines for the first legal action and reasonable diligence timelines are extended by 90 days from the expiration date of ML 20-13’s moratorium.
With respect to the SFDMS reporting requirements, mortgagees must report the Default/Delinquency Reason Codes applicable to each borrower at the end of each reporting cycle. For endorsed mortgages utilizing the Forbearance for Borrowers Affected by the COVID-19 National Emergency, mortgagees must begin reporting Status Code 06 – Formal Forbearance. Additionally, if the mortgage is newly defaulted, mortgagees must report Status Code 42 – Delinquent, and then Status Code 06 – Formal Forbearance.
Further, a new Delinquent and Default Reason (DDR) code, 055 – Related to National Emergency Declaration, was established to assist in identifying delinquencies that are a result of a National Emergency Declaration in which the physical property is not impacted. The new code may be used as of May 1, 2020, for the April 2020 reporting cycle. If mortgagees are unable to report DDR Code 055 – Related to National Emergency Declaration for the April 2020 cycle, in the interim, they must report DDR Code 010 – Neighborhood Problem. However, mortgagees must fully implement reporting of DDR Code 055 – Related to National Emergency Declaration by the July 2020 reporting cycle and that data is due to HUD by or before August 7, 2020.